“One of the biggest mistakes is assuming that people will find new software and will love it.”
Joe Fairless: Best Ever listeners, how are you doing? Welcome to the best real estate investing advice ever show. I’m Joe Fairless. This is the world’s longest-running daily real estate investing podcast where we only talk about the best advice ever; we don’t get into any of that fluffy stuff. With us today, Dan Moore. How are you doing, Dan?
Dan Moore: I’m doing great. Thanks, Joe.
Joe Fairless: Well, I’m glad to hear that and you’re welcome. Best Ever listeners, because today is Sunday, we’ve got a special segment called Skillset Sunday. So today we’re gonna be talking about if you have a software idea in real estate and you want to bring it to life, then – well, you’re in the right place because Dan is the co-founder of Vaporware, and he helps entrepreneurs take their software ideas to market in real estate among other industries. He has helped 40 clients in the past six years do that. He’s based in Raleigh, Durham, North Carolina. So first, how about, Dan, you give us a little bit of background about your company and then we’ll go from there?
Dan Moore: Yeah, absolutely. So we founded originally back in 2013, started consulting full time in 2015, and really found a need for entrepreneurs and intrapreneurs inside of larger companies to take their ideas to market and really test them out before they spend a whole lot of money and a whole lot of time on something that people wouldn’t be willing to pay for and wouldn’t help them. So if you’re inside of a company, you might be optimizing or modernizing a tool that you already have or a process that you have, anything that you’re doing in spreadsheets or something like that is really a good opportunity to bring in custom software and really solve those problems.
So we’ve worked with a variety of companies across all sorts of industries and have seen all sorts of expertise and approaches to bring products to market, but we figured that there’s a much better way to do so by quickly testing a market with just an idea or some light designs and the right kind of survey questions and that kind of thing, as opposed to jumping in and just building it and then hoping people will come to the software in the future.
Joe Fairless: Okay, so you test it out first to see if the idea has merit and then you build if it does.
Dan Moore: Absolutely, and there’s a whole bunch of different ways to test. So commonly, we do what we call smoke tests, which make it seem like there’s a whole lot more there, but we don’t actually deliver that value. We’re just really watching and analyzing if people are interested in the way that we’re talking about the product or the value that we’re talking about getting out of the product to see where people are most interested, instead of just surveying and asking where they’re interested because their behavior is often very different from–
Joe Fairless: Will you give a specific example for a smoke test?
Dan Moore: Yeah, that’s a great question. So not one that we did, but one of the most popular examples of this is how the Uber taxi company got their name. So they ran Facebook ads all along the way back when before they were the huge company that they are today, with different variations of names and value propositions, and if you clicked on one of those ads, it actually didn’t go to a website or a product offering or service offering at all, but all that they did was choose different names. So they watched and saw whoever and what were people’s behavior of which ads made the most sense, and then tailored the service and the branding and the name around that. So we’ve taken that concept and applied it to all sorts of areas in the product development world for custom software.
Joe Fairless: Okay. What’s some real estate software that you’ve created?
Dan Moore: We’ve done a lot of work in the property management space. There’s a huge wave of prop-tech companies trying to make it big and disrupt that industry overall. We’ve really had a great impact with the service providers and different optimizations around turnaround time for apartments and multifamily housing and stuff like that.
Joe Fairless: Okay. So are you able to give case studies or anything just to bring that to light a little bit?
Dan Moore: Yeah, we have a couple of case studies on our website. So one in particular was a startup out of Raleigh, North Carolina as well, that focused on the turnaround time of as soon as an apartment vacates, it was taking some larger companies several months to repaint and upfit and refresh that unit, just because of the communication flow. They’re a company called Service Connect, and we helped them figure out where their market was. So do they go after the people doing the upfit or the property management companies? What benefits and what language do they talk about? How do they optimize that process? They do a lot of analytics and reporting for very large scale operations, and tying into management systems like MRI and Yardi and stuff like that, and focusing on all those vendor relationships, and… Not like a marketplace approach where you can choose what vendor, but you already have relationships. It’s just optimizing that communication stream and making sure that people are in the right place at the right time, kind of thing.
Joe Fairless: So if someone who’s listening has an idea for real estate software, they come to you, what’s the process?
Dan Moore: That really depends. Since we’re a pretty small operation, we’re five people, experts at what we do — not trying to farm out software development or design work where a lot of our competitors lie, but we’re experts and like to think and walk through all the high-level problems. So if someone has an idea and comes to us with a solution in mind already, we can work with that and we can translate that, since we’re the ones actually doing the work and helping them deliver that end solution to market. We can plan that out, prototype it, do all those tests like I was talking about, and actually develop the software itself.
We can also help them take a step back and look at other solutions that are already out in the market and help them make trade-off decisions between what is their core value proposition. So one of those first steps that we do is walk them through the popular architecture framework called the business model canvas. It’s a single page document on how to communicate your idea really quickly and really deeply to different people. So it’s a lot of high-level strategic work that goes into the beginning of it to make sure that the product you’re building is the right fit for where that idea is.
Joe Fairless: In your experience, where do you see people who don’t go through that process make the biggest mistake?
Dan Moore: There are tons of mistakes to make. I think the current average of new startups going to market is nine out of ten fail within the first year. So they don’t deliver, they don’t gain traction, something like that. So in our experience, we wrote a whole book on this and we call it The Tips and Pitfalls to Avoid an MVP. So MVP is a term in our industry called the Minimum Viable Product. It’s what we call that first version that you’re taking to market to learn about your market and your audience of what you’re trying to deliver. So one of the biggest mistakes is just assuming that people come to the software and will find it and will love it. So really looking for that product market fit does require a lot of work on the product side, on the development of the software, but it also requires a lot of work on developing the right audience and the right market as well. So we call that customer development and figuring out who that audience is, what value proposition can you give to them… I think on your website you have a great video of value add investing. It’s that same approach, it’s like you have to really focus on that value and add something to that relationship for your customers. So being able to position the software that you have and the product that you have that you’re delivering in a way that really connects to somebody is vital, and a lot of people miss that.
Joe Fairless: What’s the cost?
Dan Moore: Great question. So it completely depends on features and stuff like that. We actually take a unique approach in that you have two main models in software development. You have fixed bid, which are someone lays out a cost and says, “Hey, I’ll deliver all this for this dollar amount.” They go away for a few months and come back and give it to you, and then you have time and materials, that comes up with an hourly rate or weekly rate or something like that and continues working until you say stop. We take a hybrid approach where we base all of our pricing on time and materials, but we cap it and understand each investor’s appetite for risk. So how much are they willing to invest to solve the problem really helps with analyzing that cost-benefit analysis. So if someone comes to us with $20,000, and says, “Hey, I really want to see what this next step is. I want to see if there’s a market opportunity here for ten times that,” we can work with that. At the same time, we work with some larger organizations that invest $250,000 or half a million because of what they’re able to accomplish, and they already have their entire investor team bought into the idea initially; they just want to be able to deliver on that idea.
Joe Fairless: Anything else that we should talk about as it relates to having an idea and building out an application or software to deliver on that idea?
Dan Moore: Yeah. I think really understanding the problem, what the value of the idea is, is important, and then realizing that software doesn’t have to be difficult. It’s a black box for a lot of people. If you focus on the value of solving that problem, you can ignore or take shortcuts on pretty much everything else. So with open source technologies today and other providers that are out there, you don’t have to build a custom invoicing system in order to deliver a new product to market. You can get there with someone else’s code and someone else’s services as long as you bundle them together in the right way, and then focus on your key value proposition.
Joe Fairless: How can the Best Ever listeners learn more about what you’re doing?
Dan Moore: They can go to vaporware.net that’s the best way, and of course, you can reach out to me personally at dan at vaporware dot net.
Joe Fairless: Best Ever listeners, if any of you have an idea for a software or an app, well now you know one way you can bring it to life. Dan, thank you for being on the show. I hope you have a best ever weekend. We’ll talk to you again soon.
Dan Moore: You too. Thanks, Joe.
This talk originally appeared here and has been posted with permission from Best Ever Show.